Global policy makers have been debating prevention of a Greek default as the country's failure to service its debt would increase risks in financial markets and the banking system in particular, Russia's finance minister said.
Talks of a possible Greek default intensified yesterday, with finance officials from around the world pressuring European policymakers to increase their efforts to prevent Greece's debt crisis from spreading.
"It is obvious that within the framework of the adopted measures Greece cannot cope with debt servicing and now the question lies in prevention of Greece's default," finance minister Alexei Kudrin told journalists on the sidelines of semi-annual policy discussions in Washington.
"Most are inclined towards the need for additional supportive measures for Greece, and Ireland, and Portugal, and Italy, and Spain."
The European Union, including the European Financial Stability Fund, should decide on needed steps for the first three countries, while Italy's and Spain's troubles should be addressed by the European Central Bank, Mr Kudrin said.
But he added that of huge importance is the political will of the affected countries to reduce spending to ensure debt servicing.
Safeguarding the banking system seems the main worry at present, as international lenders have been increasingly losing patience with Athens consistently missing fiscal and reform targets.
"It is also being viewed that Greece's default would become a bad signal to the markets, increasing their risks, starting in the banking system, then capital markets," Mr Kudrin said.
"All such events, starting from the (rating) downgrade of the United States and other countries, they increase the overall risks and impact outflow of capital from emerging markets."
Mr Kudrin also said that the global economy is facing a very tough decade as economic growth will be tapering off - though he said he believes a recession can be avoided.
"One of the main factors or measures to fight debt is economic expansion," Mr Kudrin said.
"Two years ago, European Central Bank's president Jean-Claude Trichet said we are facing a sober decade. Today, you can add that probably we are facing a lost decade. It is already obvious that growth rates will be low."
Reuters
